The new Decree on Conditions for the Delivery and Supply of Electrical Energy in Serbia enters into force today, 13 October 2023. Long-awaited regulation sends the signal that the connection procedure for new projects that has been basically on hold for more than two and a half years will be deblocked soon.
The new rules will apply to all requests for preparation of the connection study filed after April 2021.
As expected, the new decree introduces a stricter regime with tighter deadlines and higher costs for the connection of the power plants to the transmission and distribution system:
Minimum cost for preparation of grid connection study to the transmission system is EUR 50,000
This amount applies to power plants not exceeding a capacity of 50MW and is increased by EUR 400 for each MW above 50 MW to 100 MW, EUR 300 for each MW above 100 MW to 250 MW, and EUR 200 for each MW above 250 MW.
First grid connection studies are expected in the period of 20 December 2023 – 20 April 2024
The first interval for preparation of the grid connection studies is from 20 December 2023 to 20 April 2024, for the request submitted until 1 December 2023. However, it is still expected that the TSO will first adopt new rules for the connection to the grid and that the Energy Agency will confirm the development plan (with adequacy analysis) prepared and adopted by the TSO.
Performance bank guarantee must be delivered for the connection to the transmission system
If the applicants accept the connection solution in the connection study, they will need to deliver a bank guarantee in the amount of EUR 25,000 per MW of the approved capacity. The bank guarantee serves as security that the project will be developed, constructed and put into operation within the prescribed deadlines.
If the holder of the connection study withdraws from the development of the power plant within six months from the conclusion of the connection agreement, the TSO can collect 5% from the bank guarantee. After that. , the TSO can collect between 10% and the full amount of the bank guarantee depending on the stage of the development/construction.
Release of the bank guarantee in case of failure to progress with the project due to circumstances outside the investor’s control is not envisaged, although there is indication that in some of these cases, certain deadlines could be extended (hopefully, this should be explicitly provided and elaborated in the connection agreement).
The obligation to deliver the bank guarantee does not apply to state projects.
Connection approval can be extended only once for two years
The validity of the connection approval under the new regime is limited to three years for the connection to the transmission system and two years for the connection to the distribution system. It can be extended only once, while under the previous regime did not have limitations regarding the number of extensions.
Fulfilment of the conditions regarding the provision of the ancillary services
Together with the request for the conclusion of the connection study agreement applicant will have to provide proof of fulfilment of conditions for exemption from the measure on the delay of connection to the transmission or distribution system if applicable. In the case of battery storage, this will mean that the applicant will have to either include battery storage in the request for preparation of the connection study for the power plant or submit a request for a separate connection study for the battery storage if the battery storage will have a separate delivery point from the power plant.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.
By Milos Vuckovic, Senior Partner, Petar Mitrovic, Partner, and Nemanja Providzalo, Senior Associate, Karanovic & Partners